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Raleigh City Council to create policy for homes in Hillsborough Street tax district

City council members on Tuesday approved a tax hike for the Hillsborough Street business district, but they held off on expanding the district following outcry from some affected homeowners.

Property owners in the district will pay an additional 15 cents per $100 valuation in property – an increase from the current 10 cents – to fund business recruitment efforts, host events that draw visitors to the area, and maintain the street through its “Clean and Safe” program.

But the planned expansion of the district toward Cameron Village and downtown will now head to a council committee, where they’ll create a policy governing whether to include residential properties. Pointing to the exemption of Councilman Russ Stephenson’s property on Oberlin Road, several homeowners said they’d also like to be left out.

“It is clear that a business improvement district is mainly going to benefit businesses,” said Autumn Racine, who lives in a cluster of historic homes on West Hargett Street. “Many of the things that the (tax) pays for, such as marketing and festivals, should not be expenses a residential property owner should be required to pay for.”

Racine said she’d like her property to be treated like Stephenson’s – exempted from the tax. After Racine mentioned the exemption, Stephenson responded “I was told that I was ineligible” to join the business district.

That statement contradicts Stephenson’s earlier comments about the issue as well as email discussions between members of the Hillsborough Street Community Services Corp. board, which manages the district. The councilman said in April that he requested that his property “just be treated the same as everyone else has in the BID: They’ve not incorporated owner-occupied residences.”

A number of owner-occupied residences are already in the tax district, and Stephenson’s property also includes detached apartments and an office for his architecture business. Hillsborough Street board emails show the initial expansion included Stephenson, but he met with board members and “asked to remain out.” The board’s chairman, Kevin Jennings, responded that he thought the councilman’s request was “unethical,” though he later joined the board in unanimously voting to accept a map of the district that would have exempted Stephenson’s property.

Stephenson’s exemption has prompted similar requests from other residential properties, including a townhome community off West Morgan Street where residents say their homeowners association already provides little pick-up and landscaping.

Some owners of rental property also say they don’t want the extra tax. “I keep my rents low,” said Steve Guth, who owns an Enterprise Street house that’s divided into apartments. “I think this is an extra burden that’s going to cause me to increase my rents to my tenants.”

The Hillsborough Street board has offered to refund tax payments to residential property owners if they aren’t satisfied with the organization’s services. But Racine says that’s not a good compromise.

“It would still be inconvenient to have to cover the cost of the assessment for six months,” she said. “If the residents of the 800 block aren’t going to be charged ... it just makes the most sense to not include them at all.”

The tax district doesn’t have a formal policy governing whether residential properties are included. Creating one will be the task of the council’s law and public safety committee, which will take up the issue in the coming months.

“I think that would help people who live near the district to be able to anticipate” whether they could be taxed, Mayor Nancy McFarlane said.

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